New Year Resolutions Triggered by Senate Bill 382
After the North Carolina General Assembly overrode Governor Cooper’s veto of Senate Bill 382, which became Session Law 2024-57 (the “New Law”), we published a client alert describing the state-wide effect of the New Law.
With the General Assembly’s 2024 Session concluded, some interested parties hope the General Assembly might repeal or amend the New Law in 2025. But regardless of the General Assembly’s future action, the New Law controls today.
Our first alert detailed the new limitations imposed on local government zoning authority, highlighting that the New Law applies to all zoning laws adopted after June 14, 2024 (the “Effective Date”).
This alert identifies practical New Year Resolutions for local governments and property owners to consider making because of the New Law.
Resolutions for Local Governments
Because the New Law invalidates all “down-zonings” adopted after the Effective Date and a down-zoning is a law which (1) reduces density, (2) reduces the number of permitted uses, or (3) creates a nonconformity on non-residential property, local governments should consider the following:
1. Review and Categorize: Consider identifying zoning regulations adopted after the Effective Date and divide them into three categories: (A) laws that are down-zoning under the New Law, (B) laws that might be down-zoning under the New Law, and (C) laws that are not down-zoning under the New Law. For laws falling into category (A), the local government should direct staff to not enforce these laws at this time. For regulations falling within category (B), the answer is uncertain, but enforcement of these regulations may trigger litigation, including claims for attorney fees and monetary claims.
Simple. Right? Of course not!
Note the Distinctions: Some local land use regulations are authorized by the General Assembly as zoning regulations and as local police authority regulations. For example, the General Assembly adopted statutes enabling local floodplain regulations and water supply watershed regulations.
Authorized by the General Assembly (N.C.G.S. §160D-103), many local governments have simplified and unified local land use regulations for citizen convenience through adopting and codifying all land use regulations together in a unified development ordinance. The New Law applies to “zoning regulations,” but does the New Law apply to zoning regulations when such regulations are separately authorized by the General Assembly? The New Law does not expressly answer this question.
2. Consider Moratoria: While waiting (and perhaps hoping) for action by the General Assembly, development moves forward. Under the New Law, the right to develop is vested as permitted on the Effective Date. Can the General Assembly later modify this right? The answer is beyond the scope of this alert.
But let’s assume the General Assembly has authority to remove or modify this right by new legislation. For projects where an applicant has submitted an application for a development permit or approval after the Effective Date, the applicant secures a separate, independent vested right via the permit choice statutes.
Is there anything a local government can do to, perhaps, minimize vesting under the New Law by permit choice while the General Assembly might be considering changes to the New Law? Local governments may consider adopting a targeted moratorium on issuing development approvals to lessen obvious adverse impacts to public health and safety.
The possible advantage of adopting a moratorium would be to stay processing of applications for development approvals and issuing development approvals. As N.C.G.S. § 160D-107 is worded, permit choice may only apply to complete applications submitted before the moratorium became effective.
When, specifically, might a moratorium be appropriate? When a local government adopted new FEMA flood maps after the Effective Date. Local governments do not create these federal government maps but do adopt them so their citizens may purchase federal flood insurance. A moratorium provides “breathing room” for local governments to adopt standalone flood hazard regulations outside the reach of the New Law while awaiting clarifying action by the General Assembly.
But even a moratorium doesn’t provide breathing room for all development within newly identified flood prone areas. Local governments lack authority to adopt a moratorium on “development regulations governing residential uses.” N.C.G.S. § 160D-107.
Therefore, local governments have many potential New Year Resolutions but none of them restore the status quo existing before the New Law.
Resolutions for Property Owners and Developers
Local governments have many New Year Resolutions to consider, but for property owners and developers, New Year Resolutions are fewer and simpler:
1. Verify Zoning Laws: Property owners have a vested right in the zoning laws existing on the Effective Date. Like a contract, these laws establish specific rights. While most times, an electronic copy of zoning regulations is available on local government websites, frequently they are not completely current. Property owners should consider seeking a certified copy from the local government of all land use laws existing on the Effective Date. These are the terms of the property owners’ contract.
2. Expedite Development Plans: Property owners and developers who started designing a development and who like the terms of their contract should consider expediting their design and planning activity to submit a complete application and vest their development rights via permit choice. This will provide certainty that they can move forward under the version of zoning regulations existing on the Effective Date.
Like most significant changes in law, the New Law adds to the “to do” list for a New Year and the New Year brings potential for changes to the New Law. Stay tuned.
Jordan Love contributed to this article
California Attorney General Issues Two Advisories Summarizing Law Applicable to AI
If you are looking for a high-level summary of California laws regulating artificial intelligence (AI), check out the two legal advisories issued by California Attorney General Rob Bonta. The first advisory is directed at consumers and entities about their rights and obligations under the state’s consumer protection, civil rights, competition, and data privacy laws. The second advisory focuses on healthcare entities.
“AI might be changing, innovating, and evolving quickly, but the fifth largest economy in the world is not the wild west; existing California laws apply to both the development and use of AI.” Attorney General Bonta
The advisories summarize existing California laws that may apply to entities who develop, sell, or use AI. They also address several new California AI laws that went into effect on January 1, 2025.
The first advisory points to several existing laws, such as California’s Unfair Competition Law and Civil Rights Laws, designed to protect consumers from unfair and fraudulent business practices, anticompetitive harm, discrimination and bias, and abuse of their data.
California’s Unfair Competition Law, for example, protects the state’s residents against unlawful, unfair, or fraudulent business acts or practices. The advisory notes that “AI provides new tools for businesses and consumers alike, and also creates new opportunity to deceive Californians.” Under a similar federal law, the Federal Trade Commission (FTC) recently ordered an online marketer to pay $1 million resulting from allegations concerning deceptive claims that the company’s AI product could make websites compliant with accessibility guidelines. Considering the explosive growth of AI products and services, organizations should be revisiting their procurement and vendor assessment practices to be sure they are appropriately vetting vendors of AI systems.
Additionally, the California Fair Employment and Housing Act (FEHA) protects Californians from harassment or discrimination in employment or housing based on a number of protected characteristics, including sex, race, disability, age, criminal history, and veteran or military status. These FEHA protections extend to uses of AI systems when developed for and used in the workplace. Expect new regulations soon as the California Civil Rights Counsel continues to mull proposed AI regulations under the FEHA.
Recognizing that “data is the bedrock underlying the massive growth in AI,” the advisory points to the state’s constitutional right to privacy, applicable to both government and private entities, as well as to the California Consumer Privacy Act (CCPA). Of course, California has several other privacy laws that may need to be considered when developing and deploying AI systems – the California Invasion of Privacy Act (CIPA), the Student Online Personal Information Protection Act (SOPIPA), and the Confidentiality of Medical Information Act (CMIA).
Beyond these existing laws, the advisory also summarizes new laws in California directed at AI, including:
Disclosure Requirements for Businesses
Unauthorized Use of Likeness
Use of AI in Election and Campaign Materials
Prohibition and Reporting of Exploitative Uses of AI
The second advisory recounts many of the same risks and concerns about AI as relevant to the healthcare sector. Consumer protection, anti-discrimination, patient privacy and other concerns all are challenges entities in the healthcare sector face when developing or deploying AI. The advisory provides examples of applications of AI systems in healthcare that may be unlawful, here are a couple:
Denying health insurance claims using AI or other automated decisionmaking systems in a manner that overrides doctors’ views about necessary treatment.
Use generative AI or other automated decisionmaking tools to draft patient notes, communications, or medical orders that include erroneous or misleading information, including information based on stereotypes relating to race or other protected classifications.
The advisory also addresses data privacy, reminding readers that the state’s CMIA may be more protective in some respects than the popular federal healthcare privacy law, HIPAA. It also discusses recent changes to the CMIA that require providers and electronic health records (EHR) and digital health companies enable patients to keep their reproductive and sexual health information confidential and separate from the rest of their medical records. These and other requirements need to be taken into account when incorporating AI into EHRs and related applications.
In both advisories, the Attorney General makes clear that in addition to the laws referenced above, other California laws—including tort, public nuisance, environmental and business regulation, and criminal law—apply to AI. In short:
Conduct that is illegal if engaged in without the involvement of AI is equally unlawful if AI is involved, and the fact that AI is involved is not a defense to liability under any law.
Both advisories provide a helpful summary of laws potentially applicable to AI systems, and can be useful resources when building policies and procedures around the development and/or deployment of AI systems.
Beachfront Boundaries: Regulatory Takings Clarified
Jones v. Town of Harwich involved a dispute over the application of the Wetland Protection Bylaw and Regulations in Harwich, Massachusetts (“Wetland Protection Regulations”). In 1958, Lois H. Jones (“Jones”) purchased two distinct lots separated by a private driveway. The lots were known as 5 and 6 Sea Street Extension (“5 Sea Street” and “6 Sea Street”). 5 Sea Street was, and remains, a vacant lot that abuts the ocean. 6 Sea Street is improved with a four-bedroom house. In 1999, Jones sold 6 Sea Street. The record in the case indicated that Jones long intended to construct a single-family dwelling on 5 Sea Street.
In 2011, Jones filed a Notice of Intent with the Harwich Conservation Commission, proposing construction of a single-family residence on 5 Sea Street. In 2012, the Commission issued a denial Order of Conditions. Later that year, the Massachusetts Department of Environmental Protection issued a Superseding Order of Conditions, denying the project under the Massachusetts Wetlands Protection Act. In 2013, the Town of Harwich changed the tax assessment designation associated with 5 Sea Street to “unbuildable” and reduced the assessed valuation from $1,434,500 to $24,000. In 2015,1 the DEP, Jones, and some abutters, reached a settlement, which included a Final Order of Conditions. Nonetheless, the Harwich Conservation Commission maintained its position that Jones’s proposed construction would violate the Wetlands Protection Regulations, as well as the state wetlands regulations, and denied approval.
Jones filed suit against the Town of Harwich in the U.S. District Court for the District of Massachusetts, alleging that the application of the Wetland Protection Regulations to 5 Sea Street constituted a regulatory taking, entitling her to compensation. The Town argued that Jones could only recover if the Wetland Protection Regulations were the “but for” cause of 5 Sea Street being unbuildable. The Town argued that since state wetlands regulations also precluded developing 5 Sea Street, the local Regulations could not be the but for cause of Jones’s harm, and therefore, she could not recover from the Town. The District Court rejected this argument on summary judgment because the record contained evidence that the DEP’s 2015 decision could be amended, and the project might be allowed under state wetland regulations.
Next, the Court applied the cornerstone Penn Central test to determine whether or not the Town’s application of the Wetlands Regulation could constitute a regulatory taking. Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 124 (1978). The factors applied by the Court include: economic impact of the Regulations on the Plaintiffs; the extent to which the Regulations have interfered with distinct investment-backed expectations; and the character of the governmental action.
The District Court found that the significant decrease in the property’s value supported a substantial economic impact as a result of the Town’s Regulations. Additionally, the extent to which the Regulations interfered with investment-backed expectations was not appropriate for summary judgment because the parties presented competing arguments and evidence as to Jones’ intention to develop the property, and the alleged “windfall” that her estate would receive from development. Id., at 6. Finally, the District Court held that the character of the governmental action could be equivalent to a typical taking because the Regulations prevent any structure on the lot despite being generally applicable to all property.
Jones is a helpful reminder that application of local regulations may constitute a regulatory taking.
1 Jones passed away in 2014, but her estate continued her efforts to develop 5 Sea Street.
Appeals Court Shines Light on Solar Panel Protections
Kearsarge Walpole LLC v. Zoning Board of Appeals of Walpole involved a dispute over where a large-scale solar array could be placed in Walpole, Massachusetts. In Kearsarge, a solar developer (Kearsarge), along with Norfolk County Agricultural High School (Norfolk Aggie), and Norfolk County, entered into an agreement to construct a solar facility on the Norfolk Aggie campus, which is located in Walpole’s rural residential zoning district.
Kearsarge applied to the Walpole building commissioner for a building permit. The commissioner denied the permit, deeming the project a nonconforming use under Walpole’s zoning bylaw. The Walpole Planning Board upheld the commissioner’s decision, finding that the project was a nonconforming use and did not qualify for any exception from the Walpole zoning bylaw, which established that large-scale solar facilities be located within certain overlay districts. Kearsarge appealed to the Land Court, arguing that the project was exempt from Walpole’s restrictions pursuant to the “Solar Energy Provision” of G. L. c. 40A, § 3.1 Kearsarge also argued that the project was exempt under the “Education Provision” of G. L. c. 40A, § 3.2
The Land Court granted summary judgment in favor of Kearsarge, reasoning that the board’s decision indeed violated the Solar Energy Provision. However, the Land Court rejected Kearsarge’s assertion that the project constituted an educational use.
The Appeals Court affirmed the Land Court, applying the doctrine set forth in Tracer Lane II Realty, LLC v. Waltham, 489 Mass. 775, 781 (2022). Under Tracer Lane, the Court’s determination hinged on “whether the interest advanced by the ordinance or bylaw outweighs the burden placed on the installation of solar energy systems.” In Tracer Lane, the Court of Appeals ruled that Waltham’s near total ban on solar facilities (except in “one to two” percent of the city’s land area) constituted a violation of the Solar Energy Provision.
Here, Walpole argued that its zoning bylaw (which also restricted solar facilities to less than 2% of the town) was different than Waltham’s law given that the Waltham bylaw amounted to a blanket ban on solar facilities while the Walpole law allowed for expansion of the overlay districts wherein solar facilities were permitted. The Court rejected this argument holding that a town need not impose a blanket ban on solar facilities to violate the Solar Energy Provision. Rather, the Solar Energy Provision prohibits local ordinances that “unduly restrict . . . solar energy systems.” Walpole’s bylaw, by requiring “discretionary zoning relief” in order to construct solar facilities in all but 2% of the city constituted such an undue restriction – especially where expansion of the overlay districts would require an applicant to “petition to amend the Walpole zoning bylaws [by] submit[ing] their proposed amendment to a public hearing and town vote.” This, in the Court’s view was “a significant hurdle.” The Court also rejected Walpole’s argument that the interests advanced by its bylaw (protecting agriculture) promoted public health, safety, and welfare sufficient to justify that significant burden on solar development. According to the Court, “[t]he record . . . [did] not support a conclusion that a bylaw this stringent is necessary to protect the public health, safety, or welfare interests that Walpole seeks to promote.”
Kearsarge is another instance where the Appeals Court makes clear that Massachusetts courts will not hesitate to reign in local authority in the interest of enforcing the Solar Energy Provision.
1 Pursuant to Mass. Gen. Laws Ann. c. 40A, § 3, Ninth Paragraph, “[n]o zoning ordinance or by-law shall prohibit or unreasonably regulate the installation of solar energy systems or the building of structures that facilitate the collection of solar energy, except where necessary to protect the public health, safety or welfare.”
2 Under Mass. Gen. Laws Ann. c. 40A, § 3, Second Paragraph, “[n]o zoning ordinance or by-law shall regulate or restrict the interior area of a single-family residential building nor shall any such ordinance or by-law prohibit, regulate or restrict the use of land or structures for religious purposes or for educational purposes . . .”
RealPage Antitrust Consent Decree Proposed
In August 2024, the Department of Justice (DOJ) and eight states filed a civil antitrust lawsuit against RealPage Inc., alleging that its software was used to unlawfully decrease competition among landlords and maximize profits. Last week, the DOJ, now joined by ten states, filed an amended complaint alleging that landlords Greystar Real Estate Partners LLC, Blackstone’s LivCor LLC, Camden Property Trust, Cushman & Wakefield Inc., Pinnacle Property Management Services LLC, Willow Bridge Property Company LLC, and Cortland Management participated in the price-fixing scheme. These companies operate over 1.3 million residential units across 43 states and the District of Columbia.
According to the amended complaint, these landlords shared sensitive information through RealPage’s pricing algorithm to decrease competition and increase corporate profits. Jennifer Bowcock, RealPage’s Senior Vice President of Communications, rebutted the allegations, arguing that issues with housing affordability stem from the limited supply of residential units and that the government should “stop scapegoating RealPage – and now [its] customers – for the housing affordability problems.”
The DOJ also announced a proposed consent decree with Cortland Management, where the claims against Cortland would be resolved in exchange for agreeing to cooperate with the DOJ’s ongoing investigation against the remaining defendants. Under the terms of the proposed agreement, Cortland would be barred from using a competitor’s sensitive data to train a pricing model, pricing units with the assistance of an algorithm without court supervision, and soliciting or disclosing sensitive information with other companies to set rental prices. A spokesman for Cortland indicated that it is pleased with the outcome and is looking forward to “improv[ing the] resident experience” in 2025. Under the Tunney Act, P.L. 93-528, the proposed consent decree will be published in the Federal Register for a 60-day comment period, after which the court can enter final judgment. The case is United States v. RealPage Inc., dkt. no, 1:24-cv-00710 (LCB) (M.D.N.C. filed Aug. 23, 2024).
Potential Impact of FHA’s Revised Defect Taxonomy on Mortgage Originators and Servicers
On January 7, 2025, the Federal Housing Administration (FHA) officially revised its Defect Taxonomy (Final Defect Taxonomy) with the publication of Mortgagee Letter (ML) 2025-01 and the related attachment detailing those changes. The changes are effective as of January 15, 2025, and will be implemented in Appendix 8.0 of FHA Handbook 4000.1 at a later date.
FHA first proposed revising the Defect Taxonomy on October 28, 2021, with the publication of FHA INFO 2021-92. Since then, FHA announced a new proposed version of the Defect Taxonomy with the publication of FHA INFO 2024-25 on July 10, 2024 (Proposed Defect Taxonomy). As we reported at the time, the proposed revisions to the Defect Taxonomy were broad and, most notably, created a new section specific to loan servicing defects. The Proposed Defect Taxonomy did not suggest revisions to the Underwriting Loan Review section of the Defect Taxonomy, but it did propose revisions to the generally applicable introduction of the Defect Taxonomy, as well as the creation of an entirely new Servicing Loan Review section. The Final Defect Taxonomy generally aligns with the Proposed Defect Taxonomy from July 10, 2024. However, based on its own internal review and/or industry feedback, FHA has made some notable revisions to the Final Defect Taxonomy that will likely impact how the U.S. Department of Housing and Urban Development (HUD) applies it in practice.
Examples/Explanation of What Constitutes a Tier 2 or Tier 3 Finding
The Defect Taxonomy has general definitions of what constitutes either a Tier 1 or Tier 4 defect. Both relate to Findings of fraud or materially misrepresented information, but a Tier 1 defect is a Finding that the “Mortgagee knew or should have known” about and a Tier 4 defect is a Finding that the “Mortgagee did not know and could not have known” about. Unlike the clearly stated definition of a Tier 1 or Tier 4 defect, the Defect Taxonomy uses specific examples of Mortgagee conduct to define a Tier 2 or Tier 3 defect as something that falls between a Tier 1 or Tier 4 defect. These examples are included in multiple parts of the Defect Taxonomy, including the introduction, the Underwriting Loan Review section, and the Servicing Loan Review section. The recent revisions only impact the introduction and Servicing Loan Review sections.
The edits to the introduction section of the Final Defect Taxonomy are generally clarifying edits. However, FHA made a more substantive change to the examples given in defining a Tier 3 defect. Specifically, the Final Defect Taxonomy now states that a Tier 3 defect includes a Finding “of noncompliance remedied by the Mortgagee prior to review by the FHA.” This example is not included in the Proposed Defect Taxonomy. The addition is helpful in drawing a line between a Tier 3 and Tier 2 defect, because the Final Defect Taxonomy defines a Tier 2 servicing defect as a Finding that requires “mitigating documentation, corrective servicing action, and/or financial remediation.” As a result, it appears FHA recognizes that a self-mitigated defect merits a lower tier rating for purposes of the Defect Taxonomy.
For the Servicing Loan Review section, FHA made numerous revisions to the examples provided for what constitutes a Tier 2 or Tier 3 defect under each specific defect area. The revisions generally reflect a more specific or clear example of a Tier 2 or Tier 3 defect, so these revisions do not present a significant departure from the Proposed Default Taxonomy. However, it would be beneficial for all servicers or impacted parties to review the new examples of Tier 2 and Tier 3 defects under the Final Defect Taxonomy.
Remedies for Tier 2 Findings
Like the revisions to the examples of a Tier 2 or Tier 3 defect, the Final Defect Taxonomy outlines different potential remedies for a Tier 2 defect compared to the remedies outlined in the Proposed Defect Taxonomy. Some of these revisions may be impactful for Mortgagees. For example, in the context of a Loss Mitigation Processing defect, the Proposed Defect Taxonomy stated that FHA would accept a one-year or five-year indemnification if the borrower did not accept the terms of the appropriate loss mitigation option. But now, the Final Defect Taxonomy states that “FHA will accept indemnification (1-Year or 5-Year) only when the Servicer provides documentation of a good faith effort to complete” the loss mitigation option. Similar revisions were incorporated in the context of Home Disposition defects and Home Retention defects. It is unclear what constitutes “a good faith effort,” but at the very least, this revision will potentially impose a new reporting obligation on impacted servicers.
Rebuttal of a Finding or Severity Determination
The introduction section of both the Final and Proposed Defect Taxonomies state that a Mortgagee may provide supporting documentation through the Loan Review System (LRS) to rebut any Finding or severity determination under the Defect Taxonomy. However, the Final Defect Taxonomy also specifies that “Rebuttals are based on information available to FHA prior to the initial Finding.” This seemingly small addition appears to meaningfully limit the scope of the information a Mortgagee can use to rebut HUD’s determinations pursuant to the Defect Taxonomy. As a result, this limitation on the rebuttal process could be a future cause of Mortgagee concern.
Takeaways
Going forward, Mortgagees and other impacted parties likely should review the Final Defect Taxonomy to develop a better idea of what FHA and HUD view as a Tier 1, Tier 2, Tier 3, or Tier 4 defect. It would also likely be beneficial for Mortgagees to implement this information in their policies and procedures, such as internal audit and quality control, to try to preempt potential origination or servicing defects. Other factors to consider include: (1) identifying defects that could be self-mitigated and therefore characterized as a Tier 3 defect; (2) documenting good faith efforts to complete loss mitigation; and (3) reviewing the information submitted in the LRS to ensure that it is detailed enough to support a potential rebuttal to a Finding or severity determination pursuant to the Defect Taxonomy.
The impact of the Final Defect Taxonomy will become clearer as HUD interprets and implements it in the near future.
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DOJ Reports Substantial Procurement Fraud Recoveries in FY 2024
The Department of Justice (DOJ) recently announced that it obtained more than $2.9 billion in False Claims Act (FCA) settlements and judgments in the fiscal year ending Sept. 30, 2024.
DOJ reports that matters that involved the healthcare industry comprised the largest portion of these FCA recoveries in FY 2024, but that “procurement fraud” recoveries, once again, were significant for DOJ this past year.
Among the more notable procurement fraud recoveries from the past year were:
A large government contractor paid $428 million to resolve allegations that it knowingly provided false cost and pricing data when negotiating with the Department of Defense for numerous government contracts and double billed on a weapons maintenance contract, leading to the company receiving profits in excess of negotiated rates. This is the second largest government procurement fraud recovery under the False Claims Act in history.
A large federal contractor paid $70 million to resolve allegations they overcharged the U.S. Navy for spare parts and materials needed to repair and maintain the primary aircraft used to train naval aviators. The government alleged that these entities, which were owned by the same parent company, entered into an improper subcontract that resulted in the Navy paying inflated costs for parts.
A federal contractor paid $811,259 to resolve allegations that it knowingly supplied valves that did not meet military specifications. The government alleged that, under a U.S. Navy contract, the company invoiced for military-grade valves to be installed on certain combat ships when the company knew the valves had not met the testing requirements to be deemed military grade.
DOJ brought claims against a federal contractor and an individual estate of the founder, majority owner and chief operating officer of the company for allegedly causing the submission of false claims to the Department of Defense under contracts to provide Army combat uniforms. The government alleged that the company and the founder falsified the results of the insect repellant testing to conceal failing test results, including by inappropriately combining results from different rounds of testing, re-labeling test samples to hide the true origin of the samples, and performing re-tests of uniforms in excess of what the contract permitted.
A government contractor paid $55.1 million to satisfy a judgment that it made knowingly false claims to the United States when it misrepresented its commercial sales practices during the negotiation and subsequent performance of a General Services Administration (GSA) contract. The court found that the false disclosures induced GSA to accept and then continue to pay higher prices than it would have had it known of the company’s actual commercial pricing practices. The court also found that the company continuously violated the Price Reduction Clause, “a standard term in these types of contracts that requires the contractor throughout performance of the contract to maintain GSA’s price position in relation to an identified customer or category of customer agreed upon in contract negotiations.”
The City of Los Angeles paid $38.2 million to resolve allegations that it failed to meet federal accessibility requirements when it sought and used Department of Housing and Urban Development (HUD) grant funds for multifamily affordable housing. The government alleged that the city failed to make its affordable multifamily housing program accessible to people with disabilities. The government also alleged that the city failed to maintain a publicly available list of accessible units and their accessibility features, and the city, on an annual basis, falsely certified to HUD that it complied with related grant requirements.
A federal contractor paid $26.8 million to resolve allegations that Hahn Air failed to remit to the United States certain travel fees collected from commercial airline passengers flying into or within the United States.
A government contractor paid $18.4 million to resolve allegations that it billed for time not worked at the National Nuclear Security Administration’s Pantex Site near Amarillo, Texas.
A large federal contractor paid $11.8 million to resolve allegations that it submitted false claims to the Federal Emergency Management Agency for the replacement of certain educational facilities located in Louisiana that were damaged by Hurricane Katrina. The government alleged that the contractor submitted to FEMA fraudulent requests for disaster assistance funds and did not correct applications that included materially false design, damage and replacement eligibility descriptions. Combined with settlements with other entities involved in the alleged conduct, the government recovered over $25 million in connection with the disaster assistance applications prepared by the contractor.
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State and Local Executive Orders Suspend Time-Consuming Permitting and Review Requirements for Rebuilding Los Angeles
In light of the ongoing devastation wrought by the numerous wildfires plaguing Los Angeles County, California Governor Gavin Newsom has declared a state of emergency[1] and taken immediate action in an attempt to allow Angelenos to rebuild efficiently and effectively. One such action was the issuance of Executive Order (EO) N-4-25 on January 12th to temporarily suspend two time-intensive environmental laws.[2] In response, the City of Los Angeles Mayor Karen Bass issued her own executive order (Emergency Executive Order No. 1 [LA EEO1]) just one day later to “clear the way for Los Angeles residents to rapidly rebuild the homes they lost.”[3]
EO N-4-25 will, in short, suspend the permitting and review requirements under the California Environmental Quality Act (CEQA) and Coastal Act for victims of the recent fires in Los Angeles County in order to promote the restoration of homes and businesses. In addition to confirming the waiver of CEQA review, LA EEO1 waives local discretionary review processes. These fires, which – as of the date of publication – have resulted in the destruction of more than 12,000 structures, in the midst of an undeniable housing crisis in California. These executive orders are a step in the right direction to recoup the housing stock lost over the past two weeks.
EO N-4-25
The executive order issued by Governor Newsom:
Suspends CEQA review and Coastal Act permitting related to the reconstruction of properties substantially damaged or destroyed in the wildfires. The structures eligible for this suspension must be in the substantially same location and shall not exceed 110% of the footprint and height of properties and facilities that were legally established and existed immediately before the fires.
This suspension means that applications to rebuild homes, businesses, and other structures will not have to comply with laws that are notorious for extensive approval timelines, restricting land development and proposed uses, and subject to appeals and litigation, all of which could tie up a project indefinitely.
Directs state agencies to identify additional permitting requirements, including provisions of the California Building Code, that can safely be suspended or streamlined to accelerate rebuilding and make it more affordable.
These state agencies, including Department of Housing and Community Development (HCD), the Office of Land Use and Climate Innovation, the Office of Emergency Services (OES), and the Department of General Services (DSG), need to report to the Governor within 30 days on other permitting requirements that could “unduly impede” efforts to rebuild properties damaged in the fire, updating the report every 60 days to identify other requirements acting as barriers.
HCD will coordinate with local governments to recommend procedures to establish rapid permitting and approval processes to expedite the reconstruction or replacement of residential properties, with the ultimate goal of issuing all necessary permits and approvals within 30 days.
Extends protections against price gouging under Penal Code section 396(b)-(c) on building materials, storage services, construction, emergency clean-up and other essential goods and services associated with repair and reconstruction to January 7, 2026, in Los Angeles County.
Commits the executive branch to working with the Legislature to identify statutory changes that can help expedite rebuilding while enhancing wildfire resilience and safety.
Allows property owners to transfer the base year value of property that is substantially damaged or destroyed by the disaster to the rebuilt property, which could offer a significant tax savings.
While EO N-4-25 has been heralded as “really positive” and “as an admission we can safely build housing without [the constraints of these two intensive environmental laws]” by industry leaders, including the California Building Association,[4] questions regarding the implementation of this order remain. For example, the order states that eligible projects must be substantially the same size and location, but leaves the door open as to whether the use can change. Would the order still apply if the redevelopment changed the use from single-family to a single-family home with an accessory dwelling unit (ADU) or denser residential or commercial uses?
Additionally, EO N-4-25 is silent on the rebuilding or repair of infrastructure supporting the projects eligible for application of the executive order. If infrastructure cannot be installed quickly to support the other redevelopment, it is possible the success of such eligible redevelopment is hindered by the inability to utilize the new structures due to lack of services and access. Moreover, redevelopment projects under EO N-4-25 will still need to comply with local zoning and permitting ordinances. Therefore, redevelopment projects may still need to obtain discretionary approvals (i.e., conditional use permit, coastal development permit, site plan review), which are time- and resource-consuming even without the application of CEQA or the Coastal Act. Lastly, the state executive order creates a tension with Local Coastal Programs (LCP) for applicable areas (i.e., Malibu), which are at risk of being decertified by the California Coastal Commission if the local governments approve building plans contrary to approved LCPs.
Additionally, as of late, one of the most popular issues subject to CEQA challenges has been wildfire danger. EO N-4-25 will likely be at odds with recent case law that sets the requirements for analyzing a project’s impacts on evacuation routes and wildfire risk, including People of the State of California ex rel Rob Bonta Attorney General v. County of Lake (2024) __ Cal.App.5th __. Given CEQA’s requirements for a fire risk analysis and the trend of recent caselaw, local governments – in order to avoid liability imposed by the courts – may be hard-pressed to approve projects without some sort of discretionary consideration given to the redevelopment’s impacts on fire risk and evacuation routes.
Only time will tell if the Governor’s Office will issue clarifications to EO N-4-25 that address these and other uncertainties.
LA EEO1
The executive order issued by Mayor Bass will:
Coordinate debris removal from all impacted areas, mitigates for wet weather.
This will create task forces to develop a streamlined program for debris removal and mitigate risks from rain storms, uniting with the OES and other City, County, state and federal agencies.
Clear the way to rebuild homes as they were.
This will establish a one-stop-shop to swiftly issue permits in all impacted areas, directs City departments to expedite all building permit review/inspections, bypasses state CEQA discretionary review, allows rebuilding “like for like” and waives City discretionary review processes. The City has already established a Disaster Recovery Center to serve individuals and families impacted by the fire in the Pacific Palisades, which is open 7 days a week from 9 a.m. to 8 p.m. at: 10850 Pico Boulevard, Los Angeles, California 90064
Make 1,400 units of in progress housing units available.
LA EEO1 directs the Department of Building and Safety to issue temporary certificates of occupancy for 1,400 housing units currently in the pipeline across the City.
Establish a framework to secure additional regulatory relief and resources.
This instructs all City departments to report back in one week with a list of additional relief needed from state and federal regulations and requirements, as well as state and federal funding needed for recovery.
Expedite permit review and eliminate the discretionary review and other processes for “eligible projects.” An eligible project is defined as one that repairs, restores, demolishes, or replaces a structure or facility substantially damaged or destroyed by wildfires that meets certain criteria, including: (i) the structure or facility is in substantially the same location as the original structure or facility; (ii) the structure or facility does not exceed 110% of the floor area, height, and bulk of the original structure or facility; (iii) maintaining the same use, intensity, and density of the original structure or facility, i.e., no new ADUs or changes of use; and (iv) obtaining building permits for repair or reconstruction within 7 years from the date of the order.
Building permit review timelines by all City departments (including Department of Water and Power) must be completed in 30 days from the submission of a “complete application.”
Discretionary review processes are waived for eligible projects, including, but not limited to the Pacific Palisades Village Specific Plan and Pacific Palisades Village Design Review Board Guidelines. The City must review applications submitted using the streamlined ministerial review processes under Senate Bill 35 (SB 35) (Govt. Code § 65913.4). While ambiguous, it appears that while Mayor Bass is technically waiving discretionary permitting requirements, applicants may still have to file applications with the Planning Department and go through a “streamlined” entitlement process. In other words, the discretionary approvals would be processed ministerially and have the statutory review timelines for SB 35 projects, which would be 90 days from date of submittal for approval for projects less than 150 units and 180 days for projects greater than 150 units. In practice, these timelines are much longer given tribal notification requirements and preapplication forms and processes.Haul routes for eligible projects shall be approved ministerially without noticing, hearings, findings, or appeals.Clarifies that eligible projects are exempt from requirements to obtain a Coastal Development Permit under Coastal Act section 30610(g).Application of the All-Electric Building Code (Ordinance No. 187714) does not apply to eligible projects.Demolition permits are not required for structures, improvements, or facilities substantially damaged or destroyed by the wildfires.
Tiny homes, modular structures and mobile homes, are permitted for up to 3 years on the site during rebuilding.
Similar to the fires, State and local response to recent events is rapidly evolving. Sheppard Mullin will continue to provide updates as available. For more information or assistance, please contact us. Together, we can navigate this challenging period responsibly.
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FOOTNOTES
[1] Such proclamation triggers, among other things, the enforcement of price-gouging restrictions. Please see here for an article with more information.
[2] Government Code § 8571 authorizes the Governor to suspend regulatory statutes during a state of emergency upon determining that strict compliance “would in any way prevent, hinder, or delay the mitigation of the effects of the emergency.”
[3] LA EEO1 will only apply to projects within the City of Los Angeles, but not those destroyed outside the City’s jurisdictional boundaries like those destroyed by the Eaton Fire in Altadena.
[4] Pat Maio, Newsom suspends 2 environmental laws to jumpstart rebuilding in fire-damaged L.A. communities, Los Angeles Daily News, January 12, 2025, accessible here.
Do Tenants Have a Right to Ring Cameras? Courts Are Weighing In
Certain amenities in a dwelling have evolved from being considered luxuries to becoming essential, exemplified by the increased reliance on technology in the home. One particular technology that has grown in popularity is the doorbell camera, which has raised questions of how much a homeowners’ association (HOA) may regulate their implementation and use. While related legal actions have been few in number, it may be the tip of the proverbial iceberg.
There are a number of video doorbell camera companies on the market, but Ring, which is owned by Amazon, is probably the best-known. These doorbell cameras record audio and video after the motion sensor is triggered, and the owner can then hear and watch the events at their front door on their smart phone. There are various reasons that these doorbell cameras have become popular, from the convenience of knowing what is going on outside one’s home to believing that having a Ring camera will make them feel safer. However, in connection with these doorbell recordings, concerns are being raised about privacy as well, including the ability to post clips of their footage to show others in the community. See Samantha Shamhart, “The Mosaic Theory: How the Interest of Mass Surveillance and Facial Recognition Is Provoking an Orwellian Future,” Capital University Law Review, 51 Cap U.L. Rev 504 (2023).
The issue of maintaining community harmony is one of the issues that HOAs try to regulate through their own bylaws and rules. As articulated in the Third Restatement of Property, a homeowners’ association has the “implied power to adopt reasonable rules to (a) govern the use of the common property and (b) govern the use of individually owned property to protect the common property.” Section 6.7. When evaluating such rules under the Fair Housing Act, courts have focused on whether these HOA rules and regulations are facially neutral and whether they have an adverse or disproportionate impact on one group of residents. See, e.g., Morris v. W. Hayden Est. First Addition Homeowners Ass’n, 104 F. 4th 1128 (9th Cir. June 17, 2024). In addition, in “reviewing the reasonableness of [an HOA’s] exercise of its rule-making authority, absent claims of fraud, self-dealing, unconscionability or other misconduct, the court should apply the business judgment rule and should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the [HOA].” Fields Enters. Inc. v. Bristol Harbour Vil. Assn, Inc., 217 A.D. 3d 1433 (NY App 4th Dep’t June 9 2023).
Action in the CourtsWhile there have been a couple of recent challenges on discrimination grounds to HOA rules about doorbell cameras, it seems that courts are allowing such rules to be enforced. In the case of Byrd v. Fat City Condo Owners Ass’n, the plaintiff alleged that the condo association was racially discriminating against her by fining her for installing a Ring camera on her condominium door based on the condo association rules regarding exterior door modifications. 2023 US Dist Lexis 208792 (WD NC Nov 21 2023). While the court dismissed the plaintiff’s claims for breach of fiduciary duty and for intentional infliction of emotional distress, the court did find that there were questions of fact with respect to the plaintiff’s section 1981 claim. The court in Byrd noted that the plaintiff raised instances of some of the condo board knowing about modifications to the doors of other units, but did not “fine white residents for these violations.” The Byrd case went to trial, and on June 20, 2024, the jury found in favor of the defendants, noting that there was no discrimination, that the plaintiff had breached the contract, and that the defendant had complied with the North Carolina Condominium Act in levying fines that totaled $73,000.
In Ricks v. DMA Companies, the claim of disability discrimination focused on the alleged declination by the property management company of the plaintiff’s request, among other things, for a specific model of Ring camera. 2024 U.S. Dist Lexis 170140 (WD TX Sept. 19 2024). In the court’s September 2024 decision, which addressed issues of discovery and claims against certain defendants under the ADA, the court found that the plaintiff’s “newly discovered evidence does not demonstrate that [real estate agent defendant] owns, leases, or operates a place of public accommodation; that it took an adverse action against Ricks based on his disability; or that it failed to make reasonable modifications that would accommodate Ricks’s disability without fundamentally altering the nature of the public accommodation.” The court in Ricks has not yet ruled as to whether the denial of the request for a specific type of Ring camera was discriminatory in nature. This case is set for trial in June 2025.
Another such action is Deborah Reiner v. Dickens House II Homeowners Ass’n, et al., which was filed in the U.S. District Court, Central District of California (23-cv-10050). In the Reiner case, which seeks injunctive relief under the federal and California Fair Housing Act, one item that the plaintiff is challenging is the denial by the board of the homeowners association of her request to install a Ring camera, where the board denied the request based on “potential invasion of privacy.” The board had implemented a rule that reads: “Residents are not permitted to install or place any audio or video recording devices on the exterior of a unit, including but not limited to front and back doors and anywhere in the common areas. This includes but is not limited to video doorbells.” The plaintiff is alleging that her request for permission to have security cameras on her door constitutes a request for a reasonable accommodation based on her alleged disability. The Reiner case, which was filed in November 2023, recently settled and was dismissed by the court on November 15, 2024.
Another case involving a doorbell camera is Angelina Navarro, et al. v. Palmer Ontario Properties, LP, et al., which is pending in California State Court, San Bernardino County (CIV-SB-2400185). The Navarro case is pled as a mass action by a number of residents of the property who are alleging that the defendants “participated in a common scheme by failing to provide habitable living conditions,” including that the building “has been unsafe.” The claims against the defendants include contractual tortious breach of implied warranty of habitability and tortious breach of the covenant of quiet enjoyment. While most of the allegations focus on complaints about the physical building, two residents have made claims about the security on the property being unsafe. It is alleged that in connection with the building not providing adequate security, two of the residents purchased Ring cameras, but in response were served with notices to remove them. The Navarro action, which was filed in January 2024, is still pending.
ConclusionThese recently filed cases involving doorbell cameras reflect on the ongoing societal debate over privacy versus security, leading to challenges to housing providers’ right to regulate certain aspects of the residence. The residents are requesting that Ring systems be installed for their own security on the property in keeping with a growing use of such surveillance technology overall in society as it has become more widely accepted. However, some of the opposition has explicitly involved concerns about the privacy of other residents, particularly those who reside in units across the hall from residents with such cameras. This is reflected in the passage of more privacy laws, in particular with regard to the collection of biometric and electronic data. It does not appear likely that the growing use of doorbell cameras will be curbed, but how they are regulated by housing providers remains to be determined.
At the very least, housing providers that prohibit the use of doorbell cameras on their properties should ensure that the rule is applied to all residents consistently to avoid allegations of differential treatment based on residents’ membership in various protected classes.
2025 Updates to Georgia’s Notary Laws: What You Need to Know
Starting January 1, 2025, Georgia’s notaries public must comply with new provisions enacted by House Bill 1292. The law introduces updates to the obligations of notaries, focusing on journal-keeping, identity verification, and training requirements. Below is an overview of three key updates for notaries in Georgia.
Journal Requirements for Certain Notarial Acts: One of the most impactful changes is the mandatory maintenance of a written or electronic journal for notarial acts performed for “self-filers.”[1] A “self-filer” is defined as an individual submitting real estate-related documents, such as deeds or liens, for recording but who is not affiliated with certain exempted professional groups, like attorneys or title insurance agents.[2]
Confirmation of Identity: To address ambiguities in the prior statutory language, the new law clarifies the acceptable methods for confirming the identity of signers, oath-takers, and affirmants. The previous statutory language allowed identity verification through “personal knowledge or satisfactory evidence,” with only one example of “satisfactory evidence:” a Veterans Health Identification Card issued by the U.S. Department of Veterans Affairs. The amended statute replaces the vague standard with a requirement for verification using government-issued photo identification documents (valid driver’s license; personal identification card issued under Georgia law; or military identification card—still including a Veterans Health Identification Card).[3] Personal knowledge remains a valid method of identity confirmation under the new law.
Mandatory Training for Initial and Renewed Commissions: Georgia notaries public must now complete educational training prior to their initial appointment and within 30 days of each renewal.[4] The Georgia Superior Court Clerks’ Cooperative Authority is tasked with creating and regulating these programs.[5]
Steps to Determine If the Journal Requirement is Applicable to a Notarial Act
In light of the changes, Georgia’s public notaries may consider the following when performing notarial acts:
1: Identify the Type of Document.[6] Confirm if the document being notarized falls into one of the following categories:
Deeds
Mortgages
Liens as provided by law
Maps or plats related to real estate
State tax executions and renewals
If the document is not one of these types, the new journaling requirement does not apply.
2: Determine if the Requesting Individual is a Self-Filer.[7] Check if the individual requesting the notarial act qualifies as a “self-filer.” A self-filer is any individual who submits one of the above documents for recording and is not part of the following excluded groups:
Title insurance agents or their representatives.
Attorneys licensed in Georgia or their representatives.
Licensed real estate professionals.
Agents of federally insured banks or credit unions.
Agents of licensed or exempt mortgage lenders.
Servicers as defined by federal regulations.
Public officials performing official duties.
Licensed professional land surveyors.
If the requesting individual is part of any excluded group, the journal requirement does not apply.
3: Verify the Individual’s Identity.[8] Ensure the individual’s identity is confirmed through:
A government-issued photo identification (e.g., driver’s license, passport, military ID); or
Personal knowledge of the individual by the notary.
Step 4: Record Required Information in Journal.[9] If the document qualifies and the requesting individual is a self-filer, the notary must record the following in their journal:
Self-filer Information:
Name
Address
Telephone number
Details of the Notarial Act:
Date, time, and location of the notarization.
Type of document notarized.
Identification Information:
Type of government-issued photo identification presented.
Elements of the identification document (e.g., ID number, if applicable).
Note if identity was verified through personal knowledge.
Signature:
Obtain the self-filer’s signature in the journal.
Step 5: Maintain the Journal.[10] Ensure the journal is securely stored, either as a physical written document, or electronically. The duration of the notary’s obligation to maintain this journal is not clarified in the new amendment.
[1] O.C.G.A. § 45-17-8(g).
[2] O.C.G.A. § 44-2-2(a).
[3] O.C.G.A. § 45-17-8(e).
[4] O.C.G.A. § 45-17-8(h)(1).
[5] O.C.G.A. § 45-17-8(h)(2).
[6] O.C.G.A. § 44-2-2(b)(1)(A)-(E).
[7] O.C.G.A. § 44-2-2(a)(1)-(8).
[8] O.C.G.A. § 45-17-8 (e). Note: this step is necessary regardless of whether the journal requirement applies.
[9] O.C.G.A. § 45-17-8 (g)(2).
[10] O.C.G.A. § 45-17-8 (g)(2).
Protecting Against Residential Price Gouging During the Los Angeles Wildfires
As devastating wildfires displace thousands in Los Angeles County, Governor Newsom has declared a state of emergency. In the wake of this crisis, California’s price-gouging laws impose strict limits on rental price increases to prevent exploitation of displaced individuals.
Key Protections for Renters
Under California Penal Code section 396:
Rent Increase Cap. Residential landlords may not raise rents by more than 10% unless the increase reflects verified additional costs or pre-existing contracts.
New Rentals. Properties not rented or advertised before the emergency cannot exceed 160% of the U.S. Department of Housing and Urban Development’s (HUD) fair market rental determination (FMR).[1] In some localities (e.g., Beverly Hills), rental rates included in the schedule may be less than fair market value prior to the emergency declaration, as the rates are based on regional market valuations.
Evictions & Relisting. It is illegal to evict tenants and relist properties at a higher rate than the previous rental price.
These Section 396 protections last 30 days following the emergency declaration and may be extended.
What Landlords Should Know
Compliance Is Critical. Violating price-gouging laws can result in significant penalties, such as:
Criminal Penalties: Up to one year in jail and $10,000 in fines.
Civil Penalties: Additional fines under California’s Business and Professions Code and the Los Angeles County Code.
Scrutiny Is High. State and local authorities are actively investigating violations, and penalties can apply to each separate act of non-compliance.
What To Keep in Mind
Audit Your Pricing. Ensure any rental increases during the emergency align with the law.
Document Costs. Keep detailed records of any price increases justified by added expenses or repairs.
Stay Informed. Follow updates from the California Attorney General’s Office and other state agencies.
Why It Matters
Price gouging not only violates the law but undermines community trust during a critical time. Landlords play a pivotal role in helping Los Angeles recover by providing fair and compliant housing solutions to those in need.
We will continue to provide updates as they become available from the California Attorney General’s Office and other regulatory agencies.
FOOTNOTES
[1] A schedule of HUDs fair market rental rates is available at this link.
Kennedy Kline also contributed to this article.
New Jersey Attorney General: NJ’s Law Against Discrimination (LAD) Applies to Automated Decision-Making Tools
This month, the New Jersey Attorney General’s office (NJAG) added to nationwide efforts to regulate, or at least clarify the application of existing law, in this case the NJ Law Against Discrimination, N.J.S.A. § 10:5-1 et seq. (LAD), to artificial intelligence technologies. In short, the NJAG’s guidance states:
the LAD applies to algorithmic discrimination in the same way it has long applied to other discriminatory conduct.
If you are not familiar with it, the LAD generally applies to employers, housing providers, places of public accommodation, and certain other entities. The law prohibits discrimination on the basis of actual or perceived race, religion, color, national origin, sexual orientation, pregnancy, breastfeeding, sex, gender identity, gender expression, disability, and other protected characteristics. According to the NJAG’s guidance, the LAD protections extend to algorithmic discrimination (discrimination that results from the use of automated decision-making tools) in employment, housing, places of public accommodation, credit, and contracting.
Citing a recent Rutgers survey, the NJAG pointed to high levels of adoption of AI tools by NJ employers. According to the survey, 63% of NJ employers use one or more tools to recruit job applicants and/or make hiring decisions. These AI tools are broadly defined in the guidance to include:
any technological tool, including but not limited to, a software tool, system, or process that is used to automate all or part of the human decision-making process…such as generative AI, machine-learning models, traditional statistical tools, and decision trees.
The NJAG guidance examines some ways that AI tools may contribute to discriminatory outcomes.
Design. Here, the choices a developer makes in designing an AI tool could, purposefully or inadvertently, result in unlawful discrimination. The results can be influenced by the output the tool provides, the model or algorithms the tool uses, and what inputs the tool assesses which can introduce bias into the automated decision-making tool.
Training. As AI tools need to be trained to learn the intended correlations or rules relating to their objectives, the datasets used for such training may contain biases or institutional and systemic inequities that can affect the outcome. Thus, the datasets used in training can drive unlawful discrimination.
Deployment. The NJAG also observed that AI tools could be used to purposely discriminate, or to make decisions for which the tool was not designed. These and other deployment issues could lead to bias and unlawful discrimination.
The NJAG notes that its guidance does not impose any new or additional requirements that are not included in the LAD, nor does it establish any rights or obligations for any person beyond what exists under the LAD. However, the guidance makes clear that covered entities can violate the LAD even if they have no intent to discriminate (or do not understand the inner workings of the tool) and, just as noted by the EEOC in guidance the federal agency issued under Title VII, even if a third-party was responsible for developing the AI tool. Importantly, under NJ law, this includes disparate treatment/impact which may result from the design or usage of AI tools.
As we have noted, it is critical for organizations to assess, test, and regularly evaluate the AI tools they seek to deploy in their organizations for many reasons, including to avoid unlawful discrimination. The measures should include working closely with the developers to vet the design and testing of their automated decision-making tools before they are deployed. In fact, the NJAG specifically noted many of these steps as ways organizations may decrease the risk of liability under the LAD. Maintaining a well thought out governance strategy for managing this technology can go a long way to minimizing legal risk, particularly as the law develops in this area.